Three Costly Misconceptions About Paying Down Debt

Three Costly Misconceptions About Paying Down Debt

Quorum

Jun 28 2018, 10:14pm

So you decided it’s time to pay down your credit card debt… Now what?

Choosing the best and fastest course to financial freedom can be difficult. Different repayment options work better for different people. While we can’t tell you what works best for your particular financial situation, we can recommend what not to do. So when making your game plan, remember to avoid these three debt repayment misconceptions:

Myth 1: Save money with a debt consolidation company.

While it’s true that certain companies can help you negotiate with your creditors and reduce your overall balance, they often charge expensive fees for their work. In the end, you may wind up paying more than you already owe.

If you’re curious about reducing your debt, consider contacting a financial advisor or counselor, who can examine what you owe and figure out your best repayment strategy.

Transferring your current high-interest credit card balance to a lower-rate card can save you money—technically. However, it’s not always as easy as it sounds. Often cards that advertise balance transfers come with attractive introductory rates followed by steep interest hikes after a few months. Plus, some cards charge a pricey transfer fee.

If you want to use a balance transfer as a debt-busting strategy, make sure you read the fine print on your new card, and pay off the balance within the promotional period.

Myth 3: Spread repayment evenly across all lines of credit.

When faced with multiple credit card balances, it’s tempting to just pay them off evenly. Seems like the easiest choice, right? The problem with this strategy is that each card has its own interest rate, and the higher-rate cards are costing you more. So rather than paying them equally each month, target the most expensive card by increasing your payments. Once it’s paid off, you can focus on the next most-expensive card, and so on.

Source: Balance Financial Fitness

Print Article

Quorum offers for you

Credit Cards

Get the credit card that's perfect for you.

Choose between cash rewards, daily savings, and luxury travel experiences. All with great rates and a host of Mastercard benefits.

Related Articles

Comments Section

Please note: Comments are not monitored for member servicing inquiries and will not be published. If you have a question or comment about a Quorum product or account, please visit quorumfcu.org to submit a query with our Member Service Team. Thank you.